Question 1

Which of the following statements about gross profit is correct?

Accepted Answer

A)  Gross profit = Net sales − Cost of goods sold.
B)  Gross profit is recorded by a credit to the Gross Profit account.
C)  A company sells $10,000 of goods.If the gross profit percentage is 32%,net income would be $3,200.
D)  If net sales are $100 and cost of goods sold is $50 then the gross profit percentage is 100%.E) A) and B)
F) All of the above

Question 2

Broadmor's beginning inventory was $9,000.During the month,the company purchased an additional $45,000 of inventory and sold goods that cost $36,000.Ending inventory was:

Accepted Answer

A)  $9,000
B)  $90,000
C)  $18,000
D)  $0E) A) and B)
F) A) and C)

Question 3

The following is a listing of some of the balance sheet accounts and all of the income statement accounts for Northview Company as they appear on the company's adjusted trial balance.   Accounts Payable $30,000 Accounts Receivable 33,000 Inventory 60,000 Advertising Expense 36,000 Cost of Goods Sold 267,000 Delivery Expense 18,000 Income Tax Expense 6,000 Insurance Expense 3,000 Rent Expense 36,000 Sales Revenue 480,000 Sales Discounts 33,000 Sales Returns & Allowances 57,000\begin{array}{lr}	ext { Accounts Payable } & \$ 30,000 \	ext { Accounts Receivable } & 33,000 \	ext { Inventory } & 60,000 \	ext { Advertising Expense } & 36,000 \	ext { Cost of Goods Sold } & 267,000 \	ext { Delivery Expense } & 18,000 \	ext { Income Tax Expense } & 6,000 \	ext { Insurance Expense } & 3,000 \	ext { Rent Expense } & 36,000 \	ext { Sales Revenue } & 480,000 \	ext { Sales Discounts } & 33,000 \	ext { Sales Returns \& Allowances } & 57,000\end{array} Accounts Payable  Accounts Receivable  Inventory  Advertising Expense  Cost of Goods Sold  Delivery Expense  Income Tax Expense  Insurance Expense  Rent Expense  Sales Revenue  Sales Discounts  Sales Returns & Allowances ​$30,00033,00060,00036,000267,00018,0006,0003,00036,000480,00033,00057,000​  Net sales would be:

Accepted Answer

A)  $90,000.
B)  $372,000.
C)  $390,000.
D)  $480,000. E) B) and C)
F) All of the above

Question 4

On July 1,Ruth Co.sold inventory costing $9,000 to Diana,Inc.for $12,000,terms 2/10,n/30.Both companies use the net method to account for sales discounts.If Diana pays within the discount period,what journal entry will be recorded by Ruth Company when payment is received?

Accepted Answer

A)  Debit Cash for $11,760 and credit Accounts Receivable for $11,760.
B)  Debit Cash for $11,760,debit Sales Revenue for $240 and credit Accounts Receivable for $12,000.
C)  Debit Cash for $12,000 and credit Accounts Receivable for $12,000.
D)  Debit Accounts Payable for $12,000,credit Cash for $11,760 and credit Inventory for $240.E) A) and D)
F) B) and C)

Question 5

McQueen,Inc.buys premium ice cream at a cost of $3.00 a gallon and sells it for $8 a gallon.Selling,general,and administrative expenses are $1.50 per gallon.Which of the following statements is correct?

Accepted Answer

A)  Gross profit per gallon is $5.00.
B)  Gross profit per gallon is $3.50.
C)  The difference between the selling price and the cost is recorded in the gross profit account.
D)  The difference between the selling price and the cost is recorded in the Net Profit account.E) None of the above
F) A) and B)

Question 6

FOB shipping point means that ownership of goods passes to the buyer when the goods leave the seller's place of business.

Accepted Answer

A) True 
 B)False

Question 7

On March 12,Pierson Company sold goods that cost $3,500 to Colonade Company for $6,000 on credit.Terms of the sale were 1/10,n/30.Colonade paid the balance due on March 21.What amount of cash did Pierson receive?

Accepted Answer

A)  $5,940
B)  $6,000
C)  $3,500
D)  $3,465E) A) and C)
F) None of the above

Question 8

If a company returns an item to a supplier,the supplier will record the return as:

Accepted Answer

A)  a sales return.
B)  shrinkage.
C)  a sales discount.
D)  a purchase return.E) B) and C)
F) None of the above

Question 9

Sales returns and allowances:

Accepted Answer

A)  are not included on most externally reported income statements.
B)  are offered as a way to encourage customers to make prompt payment.
C)  would include terms "2/15,n/60" which allows the customer to take a 15% discount if paid in 2 days.
D)  are included on external financial statements to allow investors to compare the company's results with industry standards.E) A) and D)
F) C) and D)

Question 10

A company reported a gross profit percentage of 20% with net sales of $347,800.What is the amount of cost of goods sold?

Accepted Answer

A)  $69,560
B)  $278,240
C)  $260,850
D)  $86,950E) None of the above
F) B) and D)

Question 11

Orbit,Inc.has sales of $28,000,beginning inventory of $3,500,purchases of $17,500,and ending inventory of $4,900.The cost of goods sold is:

Accepted Answer

A)  $16,100.
B)  $21,000.
C)  $28,000.
D)  $11,900.E) C) and D)
F) B) and C)

Question 12

Under the periodic inventory system:

Accepted Answer

A)  inventory records are updated immediately after each purchase.
B)  inventory must be counted at the end of each accounting period.
C)  inventory does not have to be counted.(It can be taken from the accounting records. ) 
D)  inventory levels must be counted every day.E) A) and B)
F) A) and C)

Question 13

A company has gross profit of $58,300 and a gross profit percentage of 25%.What were the company's net sales?

Accepted Answer

A)  $233,200.
B)  $14,575.
C)  $72,825.
D)  $711,260.E) B) and C)
F) A) and D)

Question 14

Which of the following statements about the multistep income statement is not correct?

Accepted Answer

A)  The multistep income statement provides a subtotal of Income before Income Tax Expense.
B)  Income from Operations is the amount of revenues minus expenses from the company's main business activities.
C)  Any revenues and/expenses from activities other than the company's main business are peripheral results and are included in Income from Operations.
D)  Income before Income Tax Expense and Income from Operations are different if there are any peripheral revenues and expenses.E) A) and B)
F) A) and D)

Question 15

Two different companies,Vogel and Hatcher,entered into the following inventory transactions during December.Both companies use a perpetual inventory system.
December 3 - Vogel Corporation sold inventory on account to Hatcher Corp.for $240,000,terms 2/10,n/30.This inventory originally cost Vogel $160,000.
December 8 - Hatcher Corp.returned inventory to Vogel Corporation for a credit of $15,000.Vogel returned this inventory to inventory at its original cost of $10,000.
December 12 - Hatcher Corp.paid Vogel Corporation for the amount owed.
Required:
a.Prepare the journal entries to record these transactions on the books of Vogel Corporation.
b.What is the amount of net sales to be reported on Vogel Corporation's income statement?
c.What is the Vogel Corporation's gross profit percentage?

Accepted Answer

a.
Cash ($225,000 − $4,500)= $220,500
Sa...

Question 16

Which of the following is inventory?

Accepted Answer

A)  Tangible property held for sale in the normal course of business.
B)  Office supplies that a company plans to use in the next few months.
C)  Equipment used to manufacture products which will be sold later.
D)  Raw materials and work in process.E) A) and B)
F) None of the above

Question 17

Beginning inventory plus purchases minus ending inventory equals:

Accepted Answer

A)  net sales.
B)  cost of goods sold.
C)  goods available for sale.
D)  net purchases.E) A) and B)
F) A) and D)

Question 18

Neakanie Industries sells specialized mountain bikes.Each specialized bike purchased includes free maintenance service for 12 months.The price of the specialized bike is $1,000.When sold separately,a maintenance contract is $200 and a comparable but non-specialized bike is $600.Which of the following is correct?

Accepted Answer

A)  Neakanie fulfills its performance obligation at the time of delivery of the bike.
B)  Neakanie will recognize $1,000 of revenue at the end of 12 months.
C)  Neakanie must allocate the purchase price based on the stand-alone selling prices of the bike and the service.
D)  Neakanie will recognize $500 of revenue at the date of sale and the remaining $500 at the end of 12 months.E) A) and C)
F) B) and C)

Question 19

The receipt of cash is one of the operating activities of:

Accepted Answer

A)  companies that sell goods but not companies that sell services.
B)  companies that sell to consumers but do not sell to other companies.
C)  merchandising,manufacturing,and service companies.
D)  companies that sell goods they bought from others but not of companies that make the goods they sell.E) A) and D)
F) B) and D)

Question 20

Gross profit equals:

Accepted Answer

A)  Net sales minus cost of goods sold.
B)  Revenues minus expenses.
C)  Revenues minus inventory.
D)  Beginning inventory plus purchases minus ending inventory.E) B) and C)
F) A) and D)

Exam 6: Merchandising Operations and the Multistep Income Statement

Which of the following statements about the multistep income statement is not correct?

Correct Answer
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Under the periodic inventory system:

Correct Answer
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McQueen,Inc.buys premium ice cream at a cost of $3.00 a gallon and sells it for $8 a gallon.Selling,general,and administrative expenses are $1.50 per gallon.Which of the following statements is correct?

Correct Answer
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Which of the following statements about gross profit is correct?

Correct Answer
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A company has gross profit of $58,300 and a gross profit percentage of 25%.What were the company's net sales?

Correct Answer
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Correct Answer
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The receipt of cash is one of the operating activities of:

Correct Answer
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On July 1,Ruth Co.sold inventory costing $9,000 to Diana,Inc.for $12,000,terms 2/10,n/30.Both companies use the net method to account for sales discounts.If Diana pays within the discount period,what journal entry will be recorded by Ruth Company when payment is received?

Correct Answer
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Correct Answer
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On March 12,Pierson Company sold goods that cost $3,500 to Colonade Company for $6,000 on credit.Terms of the sale were 1/10,n/30.Colonade paid the balance due on March 21.What amount of cash did Pierson receive?

Correct Answer
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Gross profit equals:

Correct Answer
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Which of the following is inventory?

Correct Answer
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Orbit,Inc.has sales of $28,000,beginning inventory of $3,500,purchases of $17,500,and ending inventory of $4,900.The cost of goods sold is:

Correct Answer
verified

If a company returns an item to a supplier,the supplier will record the return as:

Correct Answer
verified

Broadmor's beginning inventory was $9,000.During the month,the company purchased an additional $45,000 of inventory and sold goods that cost $36,000.Ending inventory was:

Correct Answer
verified

A company reported a gross profit percentage of 20% with net sales of $347,800.What is the amount of cost of goods sold?

Correct Answer
verified

FOB shipping point means that ownership of goods passes to the buyer when the goods leave the seller's place of business.

Correct Answer
verified

Beginning inventory plus purchases minus ending inventory equals:

Correct Answer
verified

Sales returns and allowances:

Correct Answer
verified

Correct Answer
verified
a.
Cash ($225,000 − $4,500)= $220,500
Sa...
View Answer

Exam 6: Merchandising Operations and the Multistep Income Statement

Which of the following statements about the multistep income statement is not correct?

Correct AnswerverifiedShow Answer

Under the periodic inventory system:

Correct AnswerverifiedShow Answer

McQueen,Inc.buys premium ice cream at a cost of $3.00 a gallon and sells it for $8 a gallon.Selling,general,and administrative expenses are $1.50 per gallon.Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Which of the following statements about gross profit is correct?

Correct AnswerverifiedShow Answer

A company has gross profit of $58,300 and a gross profit percentage of 25%.What were the company's net sales?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The receipt of cash is one of the operating activities of:

Correct AnswerverifiedShow Answer

On July 1,Ruth Co.sold inventory costing $9,000 to Diana,Inc.for $12,000,terms 2/10,n/30.Both companies use the net method to account for sales discounts.If Diana pays within the discount period,what journal entry will be recorded by Ruth Company when payment is received?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

On March 12,Pierson Company sold goods that cost $3,500 to Colonade Company for $6,000 on credit.Terms of the sale were 1/10,n/30.Colonade paid the balance due on March 21.What amount of cash did Pierson receive?

Correct AnswerverifiedShow Answer

Gross profit equals:

Correct AnswerverifiedShow Answer

Which of the following is inventory?

Correct AnswerverifiedShow Answer

Orbit,Inc.has sales of $28,000,beginning inventory of $3,500,purchases of $17,500,and ending inventory of $4,900.The cost of goods sold is:

Correct AnswerverifiedShow Answer

If a company returns an item to a supplier,the supplier will record the return as:

Correct AnswerverifiedShow Answer

Broadmor's beginning inventory was $9,000.During the month,the company purchased an additional $45,000 of inventory and sold goods that cost $36,000.Ending inventory was:

Correct AnswerverifiedShow Answer

A company reported a gross profit percentage of 20% with net sales of $347,800.What is the amount of cost of goods sold?

Correct AnswerverifiedShow Answer

FOB shipping point means that ownership of goods passes to the buyer when the goods leave the seller's place of business.

Correct AnswerverifiedShow Answer

Beginning inventory plus purchases minus ending inventory equals:

Correct AnswerverifiedShow Answer

Sales returns and allowances:

Correct AnswerverifiedShow Answer

Correct Answerverifieda.Cash ($225,000 − $4,500)= $220,500Sa...View AnswerShow Answer

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a.
Cash ($225,000 − $4,500)= $220,500
Sa...
View Answer